Industry

Industry is an economic activity that refers to the manufacturing of raw materials and production of goods at factories. In simple terms, an industry is basically a large-scale business that deals with production of raw materials, goods or services. While classifying any company or business as a separate industry, attention is paid to its most dominant source of revenue. Usually, companies that manufacture similar goods or provide similar services are grouped together as an industry. Industries are mainly of four types – Primary, Secondary, Tertiary and Quaternary. The industries that have a major contribution to the Indian economy are Iron and steel, banking and insurance, textile, jute, petrochemical and automobile.

Types of Industries 

• Primary Industry 

The primary industry deals with the extraction of minerals and other natural resources from earth’s surface. The products manufactured by these industries are supplied to the general public. The economic functions of a primary industry are centred around making use of earth’s natural resources like vegetation, minerals, etc. to produce raw materials. Some of the primary industries include mining, fishing, farming, and forestry. 

• Secondary Industry 

Once the accumulation of raw materials by the primary industry is complete, the role of the secondary industry comes into play. Industries that take care of manufacturing and construction are generally classified as secondary industries. The transition of any commodity from the raw material stage to the finished product is part of the secondary sector. Since this industry deals with manufacturing products that will be supplied to the public, they make use of heavy machinery, and even human power. Automobile and textile industries are examples of the secondary industries. 

• Tertiary Industry 

Tertiary industries help in marketing the goods that are manufactured by the secondary industry. This means that these industries aren’t themselves involved in any production activities but instead they provide services to the public. Some examples of tertiary industries are finance and investment, transportation, banking, real estate services, tourism, etc. 

• Quaternary Industry 

The quaternary industry is a recent classification and it deals with information-oriented or knowledge-based products. Some examples of quaternary industries are information systems and information technology, research and development, etc.

Economic Reforms in India in 1991

In late 1990, there was a severe balance of payments crisis in the country that was caused when the foreign exchange reserves had started getting depleted. This was the trigger to India’s economic reforms of 1991. These economic reforms were introduced in July 1991 and presented a blend of macroeconomic stabilisation and structure. Stabilisation was almost a necessity to control the inflation and restore the balance of payments. The objective of these economic reforms was to bring about a  rapid and sustainable improvement in the country’s overall development. 

The Effect of Economic Reforms on Industry 

The country’s new industrial policy aimed to considerably deregulate industry and encourage the growth of a more competitive and well-organised industrial economy. The economic reforms caused a decline in the inflation rates because production of goods and services was pushed upwards and this in turn caused the prices to either fall or remain constant. Reforms also caused increased competition in the banking sector that led to increased investments and greater customer choice. There was also a significant improvement in GDP that year. 

Conclusion 

Industry refers to an economic activity that deals with the production and manufacturing of raw materials, goods and services. There are mainly four types of industries: 

• Primary industry: deals with the accumulation of raw materials by making use of earth’s valuable natural resources such as minerals, vegetation, and includes fishing and farming as well

• Secondary industry: deals with the construction and manufacturing of final goods from accumulated raw materials, such as the automobile and textile industries

• Tertiary industry: deals with marketing the final goods produced to the general public, such as banking, tourism, transportation, etc

• Quaternary industry: deals with information- and knowledge-based products, such as the IT sector

Economic reforms were introduced in India in 1991 to restore the balance of payments and for the development of the country. Due to the reforms, the country’s GDP that year showed a significant rise. The inflation rates fell because of higher production of goods and services. It also led to greater investments and increased competition in the banking and finance sector.